The Second Element: Structures, Management and Procedures

Walls and ceilings

What about the organisational walls and ceilings that allocate people to departments, divisions, grades and professions? Do they constrain how people work together, creating separate silos that put barriers in the way of doing a good job? Or do people collaborate across different tasks to create a seamless flow of work?

Of course some demarcations may be necessary, reflecting different bodies of expertise and knowledge. But this shouldn’t lead to fragmentation: different groups within an organisation should intertwine naturally in ways that help everyone understand other people’s jobs, professions, specialisms, priorities, problems and vision.

The Austrian company inet-logistics GmbH has promoted creativity and communications by breaking down functional boundaries and designing spaces that create an alternative office culture, encouraging people to work together, share ideas and collaborate on different projects.

Likewise Innocent is an innovative UK company that produces smoothies, juices and vegetable pots sold in supermarkets, coffee shops and other outlets. Its success depends on a culture that values creativity, openness and the sharing of ideas at every level. Fruit Towers, the HQ in London, is spread over four open-plan floors but seating for everyone including senior management is allocated randomly. That way, everyone gets maximum visibility and interacts with people from different functions. They get a broader understanding of different roles and how Innocent works as a whole.

Nowhere is the need to erode walls and ceilings better illustrated than in the NHS. Patients with complex or long-term conditions achieve better clinical outcomes and quality of life when they are treated by multidisciplinary teams that transcend professional and departmental boundaries, rather than by separate specialists who only communicate with each other by means of the patient’s medical record.

Hierarchy

Many organisations appear to be structured around three assumptions:

Hierarchies are just common sense: you need somebody to be in charge.

People at the frontline are of lower status and less motivated so they can’t be trusted to make decisions or manage their own work.

Other ways of organising may be fine for some companies but they’ll never work here.

Do these assumptions ring true in your organisation? Or is your organisation one of a growing number that view hierarchy as a source of waste, inertia and employee disengagement?

For these latter organisations hierarchy is essentially the embodiment of distrust. Management layers inevitably tend to put distance between decision-making and the frontline, disempowering and diminishing the voice of those at the lower levels as well as creating an implementation gap. Hierarchy breeds caution amongst managers, encouraging decisions to be delegated upwards with consequent loss of productivity.

Vertically organised structures also create silos and add to the difficulties of building bridges between functional specialisms. This undoubtedly causes frustration in resolving day-to-day issues but can have a particularly negative effect on the capacity for innovation. While many organisations are beginning to recognise the strong connection between innovation and diversity this does not appear to be reflected in the relatively robust walls and ceilings that form their organisational structures.

Hierarchy is typically inextricably linked to promotion and career development. An excellent technical specialist may be promoted to a line management position in order to retain them within the organisation irrespective of whether or not they have any aptitude for, or interest in, leading people.

. . . and flat structures

A flat structure is when the business either has no management layers or where the chain of command is very short. Advanced manufacturing company W. L. Gore and Associates is often seen as a leading pioneer of such structures. According to the company’s website:

Since Bill Gore founded the company in 1958, Gore has been a team-based, flat lattice organisation that fosters personal initiative. There are no traditional organisational charts, no chains of command, nor predetermined channels of communication.

Ricardo Semler’s Semco is well known as a “radical form of corporate democracy” that aims to distribute decision-making authority out to everyone. Factory committees run the plants while workers have unrestricted access to all corporate records and are taught how to read financial reports; they set their own wages and their own production quotas. The firm has maintained around 20% growth for nearly 30 years.

In the Netherlands, Fokke Wijnstra helped to establish an organisation which is remarkably free of formal structures. Finext is a financial consulting company without bosses or organisational divisions, one in which teams and decisions emerge through informal collaboration.

For many flat organisations the aim is not to erase hierarchies entirely. Rather they allow companies to form hierarchies organically and in ways that are fluid to meet the needs of specific circumstances and opportunities. Flat organisations rely on a decentralised approach to management and require a high degree of employee involvement in decision-making. They empower employees, share information, break down divisions between roles and share competencies, and use team or organisation-wide reward systems.

Control in flat companies lies in mutual agreements between employees and teams that are self-managing, self-organising and self-designing, and which take personal responsibility for satisfactory outcomes. Leadership is co-created through dialogue with and between employees; leaders nonetheless tend to play a key role in espousing collaboration as a core value and in stimulating empowering and enabling behaviours amongst their colleagues.

Annoying processes

Are the systems and procedures that govern decision-making, resource allocation and standard operating procedures aligned with empowerment and trust? Or do they reflect a culture of centralised control and micro-management? Truly innovative workplaces recognise the need for a consistent approach to empowerment, learning and development running through every aspect of corporate policy from reward systems and performance appraisal to flexible working and budget devolution.

In one UK city council, a leisure centre manager needs eight signatures on a piece of paper from different senior managers in order to recruit a junior member of staff from his or her own budget. The process can take months and meanwhile the work gets done by expensive temporary staff. It makes the managers feel undervalued and mistrusted.

How much control is actually necessary? Are the risks of loosening control greater than the (real and opportunity) costs of spending senior management time on relatively trivial issues?

There is ample evidence to suggest that in most workplaces performance management and appraisal processes seldom stimulate employee engagement and improvement. More often than not they destroy it. The cyclical appraisal is little more than a ‘tick-box’ exercise, poorly understood by line managers and sometimes feared by appraisees.

Is the formal appraisal interview a ‘tick box’ exercise? Or is it a milestone in a continuous coaching conversation with a line manager who understands how to help each individual develop and deliver their best performance?

Blame cultures are still remarkably common. They lead to concealment, risk aversion and sometimes to bullying, so pose a significant corporate risk.

Are there established procedures for shared learning from mistakes and failures in an open and blame-free way?

What you measure is what you get. But it’s much easier to measure things that can be recorded on spreadsheets rather than those vital but intangible assets like co-operation, creativity and commitment. KPIs and targets have a way of creating perverse behaviours, distracting management attention from what should be done to what can be measured. Innovation and improvement become luxuries.

Is the importance of shared learning, reflection, improvement and innovation recognised in the organisation’s system of targets and incentives?